Wholesale inflation jumped to 11.4% in September, government data showed on Wednesday. This rise followed a sharp increase in food, fuel, and commodity prices. Rajni Sinha of CareEdge Ratings said, "Persistently elevated crude oil prices could raise freight, agricultural and irrigation, and transportation costs." Many sectors now face higher costs.
Wholesale inflation, based on the Wholesale Price Index (WPI), surged to 11.4 per cent in September, driven by a sharp rise in food, fuel and commodity prices, according to data released by the government on Wednesday. The print stood at 9.9 per cent in August.
The latest reading is the highest in the current WPI series with 2022-23 as the base year. According to the Commerce Ministry, year-on-year inflation in Primary Articles, Fuel and Power, and Manufactured Products stood at 8.67 per cent, 25.85 per cent, and 9.76 per cent, respectively, in September 2026, compared with 7.76 per cent, 22.93 per cent, and 8.37 per cent in August.
Commodity prices
Across major categories, mineral oils (including petroleum products), food articles, crude petroleum and natural gas, coal and lignite, basic metals, chemicals and chemical products, textiles, rubber and plastic products, and electrical equipment were the key drivers of WPI inflation in September, the Commerce and Industry Ministry said while releasing the data.
According to Rajni Sinha, Chief Economist, CareEdge Ratings, fuel and power inflation remained elevated as prices of crude petroleum, natural gas and mineral oils continued to rise amid uncertainty surrounding key maritime chokepoints. While retail fuel prices have remained unchanged, oil marketing companies have increased bulk diesel prices, which are now nearly ₹50-60 per litre higher than retail prices.
"Persistently elevated crude oil prices could raise freight, agricultural and irrigation, and transportation costs. Beyond energy, prices of select base metals, particularly copper and aluminium, have also remained firm, with copper touching an all-time high," she said.
Supply disruptions and robust demand from electrification, renewable energy expansion and data centres have supported metal prices. Elevated commodity prices are a cause for concern as they could sustain wholesale price pressures and indirectly feed into the consumer price index (CPI) basket, she added.
Core inflation hardens
Rahul Agrawal, Principal Economist, ICRA, said core WPI inflation, excluding food and fuel, hardened to a record 9.8 per cent in September from 8.1 per cent in August, with 13 of the 21 sub-sectors reporting higher inflation readings during the period.
On a sequential basis, core WPI rose sharply by 1.5 per cent in September, reflecting the upswing in global commodity prices during August and September following the flare-up of tensions in West Asia.
Outlook remains challenging
Economists expect inflationary pressures to persist in the coming months.
"Looking ahead, the inflation outlook remains vulnerable to geopolitical and weather-related risks. Uncertainty surrounding key shipping routes and attacks on energy infrastructure continue to keep energy prices volatile. On the domestic front, a deficient monsoon poses risks to agricultural production," Sinha said.
Although kharif sowing is lower by only about 1 per cent year-on-year, below-normal rainfall could adversely affect crop yields. Lower reservoir levels and inadequate soil moisture in several regions could also weigh on rabi crop production.
"The government may resort to supply-side interventions to contain food inflation. Taking these factors into account, we have revised our projection for average WPI inflation in FY27 to around 10 per cent," Sinha said.
Food inflation
Agrawal said that while the sequential pace of increase in food prices has moderated so far in October compared with September, an unfavourable base effect is likely to push up food inflation further in the current month.
"Consequently, ICRA expects WPI food inflation to rise to around 9.5-10 per cent in October," he said.